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Netflix will be rolling out price increases for some consumers in the U.S., U.K. and France starting Wednesday.
In the U.S., the prices for the basic plan — the lowest tier plan without advertising, which is no longer available to new members — will increase from $9.99 to $11.99, while the premium plan, which allows users to watch in Ultra HD on supported devices and download on six supported devices at a time, will increase from $19.99 to $22.99. The plan with ads, at $6.99, and standard plan, at $15.49, will remain the same price.
In the U.K. and France, pricing for the ad and standard plans remain unchanged, while the basic plan is jumping to 7.99 pounds and 10.99 euros, respectively, and standard is increasing to 17.99 pounds and 19.99 euros, respectively.
“While we mostly paused price increases as we rolled out paid sharing, our overall approach remains the same — a range of prices and plans to meet a wide range of needs, and as we deliver more value to our members, we occasionally ask them to pay a bit more,” Netflix said in its third-quarter shareholder letter.
Speaking during the third-quarter earnings interview, Netflix Co-CEO Greg Peters would not comment on when price increases on the other plans may happen, but said the timing will fit in to the company’s “philosophy” of “occasionally” raising prices to continue delivering better content.
The changes come as Netflix continues to ramp up its monetization efforts on the platform, which have included its new advertising tier — which saw its membership up close to 70% from last quarter and 30 percent of signups in the countries with the ad tier choosing that tier — and its password-sharing crackdown. However, the price hikes also come as the streamer reported about $1 billion in “lower-than-planned cash content spend,” over the past quarter due to the SAG-AFTRA and WGA strikes.
Amid the strikes, in the third quarter, the company reported revenue of $8.5 billion, an increase of 8 percent year-over-year, and the addition of 5.9 million new subscribers last quarter thanks to the rollout of paid sharing.
The streamer says it has now “taken action” on paid sharing in every region the company operates in and continues to see a low cancel reaction.
“The cancel reaction continues to be low, exceeding our expectations, and borrower households converting into full paying memberships are demonstrating healthy retention. As a result, we’re revenue positive in every region when accounting for additional spinoff accounts and extra members, churn and changes to our plan mix,” the letter reads.
However, in the earnings interview, Peters said the roll-out would continue over the next couple of quarters and would likely continue to bring in more subscribers.
“I think folks are trying to figure out how much juice is left there, and I would say we anticipate that we will have incremental acquisition and incremental adds for the next several quarters,” Peters said.
He added that there will be some viewers who do cancel and may take several years to bring back.
“We have many hundreds of millions of qualified households out there. They’re smart TV households that we want to win over over the next several years, and those borrowers, we’re not going to convert in the next couple of quarters, represent that same group. So we’re going to go after them the same way we’re going after people who have never signed up for Netflix, which is having incredible content, offering an incredible value, and getting them so excited that they just have to sign up,” he said.
In July, Netflix said it had reached more than 100 countries or more than 80 percent of its revenue base in the password crackdown.
The streamer began cracking down on users who share their Netflix account with others in the U.S. on May 23 after launching the program in several countries in early February. In the second quarter, executives said “the cancel reaction was low” as it rolled out the initiative and that it was seeing “healthy conversion” of those borrowers into full-paying Netflix memberships.
In the U.S. and select other countries, the account holder can also choose to add a member outside the home to their account for $7.99 a month.
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